Uber-luxury brand Hermès, best known for its coveted Birkin handbag, reported a double-digit jump in sales as high-income shoppers continue to spend on pricey products.
Paris-based Hermès said Thursday that sales rose 23% in the first quarter, driven by rising demand in all of its international markets. Sales in the Americas rose 19% off “good momentum” in the US and were up 23% in Asia (excluding Japan) as wealthy shoppers in China flocked to the brand.
Store traffic in the US also continued to rise, said Eric du Halgouet, executive vice president of finance for Hermès, according to a report.
The results, along with the quarterly earnings of other purveyors of high-end products, show that some status symbols and big spenders are undeterred by economic uncertainty.
Getting a Birkin handbag, which can sell from $10,000 at retail to record premiums of $450,000 at auction, directly from its maker is a difficult feat — one often achieved through celebrity status or at the least a spending history with Hermès. The brand produces only a limited quantity for sale each year.
Yet demand remains so high that earlier this month, Hermès opened a new manufacturing plant in eastern France. Besides its handmade handbags, the luxury goods company also produces ready-to-wear fashion, silk scarves, shoes, watches and saddlery.
Hermès isn’t the only company with rising fortunes rise during a slowdown in the global economy. Shares in LVMH, the world’s biggest luxury group, jumped to a record high after it reported strong first-quarter sales buoyed by the economic re-opening in China.
The stock of Europe’s most valuable company rose 4.6% Thursday to hit €875 ($965) apiece, boosting the fortune of its owner Bernard Arnault, already the world’s richest man.
(LVMHF) was targeted by opponents of French President Emmanuel Macron’s pension reforms on Thursday. Protesters taking part in a nationwide strike against an increase in the retirement age forced their way into the company’s headquarters in Paris.
“If Macron wants to find money to finance the pension system, he should come here to find it,” Fabien Villedieu, a union leader, told CNN affiliate BFMTV outside the building.
The owner of brands such as Tiffany & Co. and Dior reported late on Wednesday sales of €21 billion ($17 billion) in the first three months of the year, up 17% from the same period in 2022.
The conglomerate said first-quarter sales in Asia, excluding Japan, were up 14% year-over-year, which represented a “significant rebound.”
Sales were lifted by the relaxation of coronavirus restrictions in Asia, LVMH said in a statement. China ended its strict zero-Covid policy in December.
“We registered some pretty nice pick-up in China, which bodes well for the rest of the year,” Jean-Jacques Guinoy, LVMH’s chief financial officer, said Wednesday.
The company’s cosmetics lines were still a “little under pressure” in mainland China, Guinoy added, though leather goods and jewelry were performing well in the world’s second-biggest economy.
“Overall, we are extremely optimistic,” he said.
In Europe and Japan, first-quarter sales were strong, rising 24% and 34% respectively, thanks to “robust demand” from local consumers and international travelers. In the United States, sales rose 8%.
Stocks in the $460 billion company have rocketed 29% since the start of the year, with the luxury goods market proving resilient in the face of high global inflation and fears that some economies could tip into recession.
Arnault, LVMH chairman and CEO, overtook Elon Musk to become the world’s richest person in December, with a total net worth of $198 billion to Musk’s $176 billion, according to the Bloomberg Billionaires Index.
— Oliver Briscoe, Xiaofei Xu in Paris and Parija Kavilanz contributed reporting.